In 1998, Xu Wenli, Wang Youcai, and Qin Yongmin, founders of the China Democracy Party, were sentenced for their party-building activities, marking the establishment of political parties as a taboo in China.
The Ministry of Finance issued 270 billion yuan in special treasury bonds to replenish the capital of the Big Four banks, and set up four major asset management companies to strip off 1.4 trillion yuan in non-performing assets.
The central authorities issued Document No. 10, characterizing the mass layoff of workers as an inevitable process in the economic transition, acknowledging that it would bring temporary difficulties to some workers, while claiming that this accords with the long-term interests of the working class.
By the end of 1997, a total of 12.74 million workers had been laid off or reassigned by state-owned enterprises nationwide, of whom 6.34 million had still not been re-employed; some enterprises were unable to guarantee basic living allowances and social insurance.
After taking office as Premier of the State Council, Zhu Rongji initiated the three-year relief program for state-owned enterprises. Through the policy of 'seizing the large and releasing the small' and downsizing for efficiency, he triggered a massive wave of layoffs among SOE workers.
In 1998, Wen Jiabao was promoted to Vice Premier and served as the overall commander of disaster relief in the catastrophic floods that year, rushing to the front lines.
Between 1998 and 2003, the total number of laid-off workers nationwide reached 28.18 million, among which the three northeastern provinces accounted for a huge share, with workers in Liaoning, Heilongjiang and other places subjected to the buyout of their years of service.
Zhu Rongji replicated in the State Council Shanghai's approach to streamlining processes, cutting the number of ministries and commissions in half from 40; large numbers of cadres at division level and above were reassigned to the private sector or took early retirement, making the scale of personnel changes unprecedented.